The grand jury indictments deal with four types of scams used in mortgage fraud. This is how they commonly work:
The Flip Scheme: A buyer purchases and sells a property in simultaneous closings, selling the property for a higher and sometimes artificial value set by an appraiser. Exaggerated appraisals can deceive lenders into giving loans for far more than a house is worth.
With simultaneous flipping, the proceeds in the second transaction can be used to illegally make the down payment on the other transaction. That way, the buyer uses little or none of his or her money, despite declaring a down payment on the initial HUD settlement statement.
